The fire broke out in the Scorpio unit of the company, early morning on Wednesday and was brought under control with the help of 25 fire tenders later
Nashik: A major fire broke out at the Satpur plant of Mahindra and Mahindra Ltd (M&M) early this morning, fire brigade officials said.
According to a PTI report, the fire broke out in the Scorpio unit of the company, early morning, which was brought under control with the help of 25 fire tenders of the Nashik Municipal Corporation as well as the company's own fire fighting unit. Nobody was injured in the incident, they said.
"The Scorpio plant of the company was gutted in fire. But we do not know the reason behind the fire as yet. We are also yet to estimate the exact amount of loss," Nachiket Kulkarni, Head M&M's automobile plant, told reporters.
Senior General Manager (Personnel) Udaykumar Vaidya said that spare parts of the company's popular SUV-- Scorpio and of other vehicles were kept at the logistics department, besides some cardboard and plastic material. "The company is finding out the reason behind the incident," he said.
In a regulatory filing, M&M said a fire broke out in one of the storage areas pertaining to manufacturing of Scorpio/Xylo TCF lines of Nasik plant. "The fire has been confined to this specific area. There has been no casualty. As a safety measure, the operations of the Plant have been suspended in the first shift and the cause and extent of damage is being ascertained. The production loss in the first shift is estimated to be around 250 vehicles. The Plant assets are adequately covered by insurance. The Management expects to restart the Bolero & Verito lines fully and the Scorpio line partially, from the second shift onwards," it added.
Team dynamics play a vital role and therefore need to be considered while hiring. Many firms are taking the right steps by conducting personality assessments to gauge the ability of a hire to work well in teams
Despite all precautions, there is no way to tell accurately whether a new recruit will be able to perform. It is a gamble. To reiterate, the performance delivery of an employee is dependent on so many factors-most important being empowering an employee to take decisions. Delineating the job responsibilities is also a sensitive process. If it is far too complex, it may scare the wits out of the prospects. It is also important to link the job responsibilities with the business goals.
Team dynamics play a vital role and therefore need to be considered while hiring. Often, employees who have been in the organisation (where the entrepreneur is at the helm of the affairs for a long time) resist change and can prove to be a bane when the firm's business model changes. Their emotional attachment to the past (and the entrepreneur) will make it impossible for the organisation to move ahead for executing its strategy. This is mostly the case in those organisations that are not process-driven. Such employees may no longer fit in the new scheme of things. The matter needs to be handled with utmost sensitivity. Such employees will have to be retrained. Expectations from them have to be realistic.
Candidates are smart nowadays. They are well-informed (thanks to the Internet and social media) and so they use all their ingenuity to overstress their strengths and underplay their weaknesses. Candidates with king-sized egos can find it a bit of a challenge to settle quickly in a new organization. Mr Surendran, a consultant who worked for Personal Search Services, says that candidates who have worked in multinational firms find it difficult to adjust and adapt to the organizational climate in start-ups and Indian firms.
Many firms are taking the right steps by conducting personality assessments to gauge the ability of a hire to work well in teams. No employee can afford to bad mouth his present organization in front of his potential employers. However, recruiters can seek honest feedback from candidates about the real reason for leaving. Candidates are well-advised to give honest opinion that is constructive and subtle. For instance-instead of saying that the current organization does not reward talent, a candidate can say that the organization has a policy of not discriminating between performers and non-performers.
The values in an organization are greatly dependent on the CEO and his outlook (this is more so, if it is a sole proprietorship firm). Hiring candidates who can meet the long term goals of the organization is a good strategy. If one is focused too much on hiring candidates with similar skill sets, then this may not always lead to a successful outcome. Placing more emphasis on the future is also a step in the right direction. Too many recruiters focus on what the candidate has done in the past. Very few look at what the candidate can deliver in the future.
In India, there is a tendency for recruiters/organizations to look down upon people who voluntarily apply to an organization. Recruiting is an on-going process. Even if there is no vacancy, firms can preserve resumes and source them when there is a potential opportunity. The response given to such candidates says a lot about the mindset of the top teams.
Use of social media, tapping the information in journals and magazines, sourcing candidates from the membership details of professional organizations, using industry trade shows to spot talent-these are some of the innovative hiring techniques used by some organizations. What a candidate does after office hours is also gaining credence as part of the recruitment process. The locations for conducting an interview are also changing. The days of an intimidating interview panel asking questions to a candidate sitting across the table are over. Informal interviews in coffee shops and restaurants are in. This is a welcome change for sure.
Let's end with an interesting story of mindless hiring process that got corrected on the spot. A past president of a Tata Group firm used to tell interviewers "be friendly with candidates and ask relevant questions". He told an instance where as an observer during an interview, he noticed that the interviewer was asking the candidates questions which were not relevant. The interviewer continued to frame some more similar questions that bordered on the absurd. At that time, the president politely asked the candidate to wait outside and informed him that he will be called back. Then he asked the interviewer, "will you please give me the answers that you put to the candidate?"
The interviewer was shocked. He did not expect such interruption from president but mumbled "sorry sir". The president patted him and told him to refine his interviewing skills by preparing relevant questions and then called the candidate inside. The reframed questions elicited correct answers and the candidate was selected and became one of the top executives in the company. In this episode, the guidance of the president is to be appreciated.
In another instance, a group of supervisors and a HR person were interviewing candidates for the post of fitter, turners and machinists. The supervisors were happy with the candidates whose basic knowledge was sufficient to get work out of them. But the HR person suddenly asked "who is the prime minister of Sri Lanka?" which baffled the works manager who was observing the procedure. He got up and courteously called the HR person outside the room and told him "If the candidate is so much knowledgeable to know politics and know names of presidents and prime ministers, he could not have stopped from ITI course-the crowd in ITI stream is lower middle class who cannot afford a newspaper. He further said "Am I right in suggesting that to this type of candidates, we will stop short of asking basic technical questions?" The HR person acknowledged the guidance of the works manager.
While it seems RBI has put a lot of thought since the September 2011 guidelines theFinal Guidelines may just leave the market cold
The much awaited and talked about securitisation guidelines have been published by the Reserve Bank of India (RBI) on 7 May, 2012 (Final Guidelines). The world has been spitting venom on the structured finance instrument and calling it names for causing the recent financial crisis the world has witnessed. Taking cues from the changes in the regulations globally, the RBI also introduced changes to the existing guidelines. The first draft of the securitisation guidelines were released in April 2010, two years back and the next draft in September 2011 causing brouhaha amongst the market players.
The September 2011 draft guidelines made the market sceptic that the guidelines will bring an end to direct assignments ushering an era of 'structured' finance in essence and spirit. The guidelines have considered the causes of financial crisis and have attempted to take early action in India-streamline the markets. However, while attempting to tighten the noose on the market, more often than the regulations backfire and the intent gets lost completely.
The takeaways from the Final Guidelines are the following:
Minimum Risk Retention requirement and Minimum Holding Period requirement:
The current guidelines have tried to address the problems of originate-to-distribute model by requiring originating banks to ensure seasoning of loans in their books before they are being securitised. This would ensure that the banks adhere to firm underwriting standards while originating the loans in their books. Another popular jargon, which is also is a by-product of the recent global meltdown; "skin in the game" also ensures that banks retain some risk in the securitised portfolio by way of minimum risk retention requirement. As is the trend globally, the originators are required to have their skin in the securitisation transactions to ensure that the investors' interests are protected throughout the term of the instrument by having originators equity in the transaction. While the earlier draft guidelines asked for the minimum risk retention (MRR) requirement and minimum holding period (MHP) requirement based on the term of the underlying, the Final Guidelines factor the repayment frequency and the tenor. This may seem like a breather in case of microfinance loans as otherwise if the earlier drafts were making it difficult for microfinance loan receivables to be securitised, shunning this mode of refinancing for the industry completely.
However the Final Guidelines state the criteria for determining the minimum holding period as the loan pool demonstrating minimum recovery performance to ensure good underwriting standards and that it should not pass the project implementation risk to the investors. The purpose of securitisation is to diversify the risk. Risk in securitisation is passed to the investors, but the criteria laid down above are ambiguous. The RBI does not explain what 'minimum' recovery performance it is looking at, this would leave market to have its own norms for minimum recovery performance of the pool before securitising. The MRR requirements are similar to the earlier draft with an addition that in case of bullet repayment loans/ receivables, the risk retained would be 10%.
Booking profits upfront:
While the February 2006 guidelines required profits to be amortised over the life of the securities issued, the Final Guidelines allow the recognition of cash profits arising out of securitisation profits adjusted against the marked-to-market losses suffered by the originator due the exposure in the securitisation transaction. Booking of upfront profits, that is the sale consideration exceeding the carrying value of the assets, is in line with international practices and is favorable.
Are direct assignments going to dry out?
The February 2006 guidelines did not cover direct assignments and led to market moving from PTC structure to bilateral sales. The September 2011 draft guidelines almost strangulated the existence of direct sales, however in our view, the final guidelines seem to have provided a breather here. As per the 2011 draft guidelines in case of direct assignments, banks were not allowed to offer credit enhancements and liquidity facilities and the risk retention was pari passu with that of the transferee making direct assignments impossible.
In the Final Guidelines, the MRR requirements are not explicitly stated to be pari passu to the transferee's investment and RBI has left ambiguity here. In the Final Guidelines, RBI required banks to obtain a legal opinion which would indicate the "legal validity" of the interest retained and the opinion would confirm that the arrangement is not interfering with the risks and rewards associated with the loans to the extent transferred to the assignee and that the originator is not retaining any risk and reward associated with the loan transferred.
The Final Guidelines however require the banks to retain some skin in the game. The risk retention requirement is a percentage of the transferred asset. If by way of a legal opinion, the originator needs to confirm that the transferee's risks are protected, it is nothing but a credit enhancement provided in the garb of MRR requirement. Where risk is protected, rewards automatically get protected.
True Sale Criteria
While the guidelines have explicitly provided for ring fencing of the assets from the creditors even in the event of bankruptcy of the originator; the substance of the transaction will only be put to test before the judiciary to determine the claw-back. As we have witnessed in the past most securitisation transactions have not fulfilled the true sale criteria before the courts of law and have faced the re-characterisation risk , so while the concern is well addressed, the remedies are not.
Securitisation exposures not permitted:
The earlier guidelines had outrightly rejected securitisation in case of 1) re-securitisation of assets, 2) synthetic structures and 3) revolving structures. However in the Final Guidelines it seems RBI has expressed intent to revisit their appropriateness in due course. In our view, there is no rationale behind barring synthetic structures and it may take quite a while, before RBI revisits these guidelines.
Further, we have been holding the view that though revolving structures have not been permitted, the intent of RBI is to ensure that where the borrower is under a line of credit, such as credit card receivables and cash credit facilities, such receivables should not be securitised. However, in case where there are loans with repayments by way of EMIs (equated monthly instalments) and loans are sold on regular basis and the exposure limits do not vary such as in case of microfinance loan pools, the intent may not be to prohibit revolving structures. There seems to be ambiguity here as well, but for the benefit of the market progressing we assume that RBI'd stance on this would be more supportive than restrictive.
Lastly, the Final Guidelines explicitly prohibit clean-up call options as in the RBI's views it tantamounts to repurchase of assets. However the need for clean-up call options is commercial viability of the transaction more than re-purchase of assets and is more of a commercial call than a regulatory dictate. This in our view is totally irrational and unthoughtful.
On the whole, while it seems RBI has put a lot of thought since the September 2011 guidelines, neither are the Final Guidelines benign nor malignant. The Final Guidelines may just leave the market very neutral for acceptance.
(The author can be contacted at [email protected])